Chargebacks are an unavoidable part of selling life insurance, but they don’t have to eat away at your commissions. While no agent can eliminate them entirely, the key is reducing them as much as possible by selling the right way, selecting the best products, and following up effectively.
I consistently maintain a persistency rate of 90% or higher, and through experience, I’ve learned what works—and what doesn’t—when it comes to keeping policies in force. Here are some strategies to help you avoid unnecessary chargebacks and maximize your earnings.
Avoiding Chargebacks Starts With the Right Sales Approach
One of the biggest reasons policies cancel is because the wrong sales approach was used. Agents who push too hard often find that their clients back out as soon as the pressure is lifted. Instead of forcing a sale, focus on having real conversations, where you help the client find a solution that actually works for them.
Common Sales Mistakes That Lead to Chargebacks
- Applying too much pressure – If someone is hesitant, don’t try to force them into buying. Instead, take the time to understand their concerns and address them properly. If they still aren’t convinced, walking away is better than writing a policy that will be canceled within weeks.
- Creating artificial urgency – Fear-based selling or making someone feel guilty for not purchasing a policy might work short-term, but it rarely leads to long-lasting coverage. Clients who buy out of fear often change their minds once the emotional pressure fades.
- Skipping over real objections – Encouraging a client to “just try it” or telling them they can always cancel during the free-look period almost guarantees they will do just that. If they aren’t confident about the decision at the time of sale, they won’t stay committed to the policy.
Successful agents focus on educating and guiding rather than pressuring and persuading. When a client understands the value of what they’re purchasing and feels comfortable with their decision, they are far more likely to keep the coverage.
Choosing the Right Product Can Make a Huge Difference
Not all policies perform the same when it comes to persistency. Certain products have higher chargeback rates, and knowing what to sell—and what to avoid—can protect your commissions.
- Avoid Guaranteed Issue (GI) policies unless absolutely necessary – These plans come with higher premiums and a waiting period, which often leads to cancellations. Clients feel like they’re paying for something without receiving immediate value, making them more likely to lapse.
- Stick with level-benefit plans when possible – If a client qualifies for a policy that offers immediate coverage at a lower cost, they are more likely to keep it. Always prioritize these plans when they are an option.
A good rule of thumb is to sell coverage the client will be comfortable keeping long-term. If they feel like they’re overpaying or that the policy doesn’t truly benefit them, chargebacks become much more likely.How to Keep Policies Active After the Sale
Writing a policy is only half the battle. Many chargebacks can be avoided with proper post-sale follow-up. Clients who feel abandoned after the sale are more likely to cancel, so keeping in touch and being available when they need help is crucial.
Steps to Take After the Sale to Prevent Cancellations
- Send a personalized thank-you card – A simple note expressing appreciation for their business, along with your contact information, can make a lasting impression. It reinforces their decision and keeps you top of mind if they have questions.
- Always answer your phone – If a client calls with a question or concern and can’t reach you, they may lose confidence in the policy and decide to cancel. Being accessible goes a long way in building trust and keeping your business on the books.
- Follow up on missed payments – Many chargebacks happen due to payment issues that could have been easily fixed. If a client misses a payment, a quick call can often resolve the problem before the policy lapses.
Following up doesn’t take much effort, but it makes a huge impact on persistency rates and long-term client retention.
How to Handle Cancellation Requests
If a client calls to cancel, don’t just process the request over the phone. Many cancellations happen because of simple misunderstandings or affordability concerns, both of which can often be addressed in person.
Instead of agreeing to cancel immediately, say something like:
"I completely understand. I just need to stop by to take care of a quick signature. Will you be home tomorrow?"
Once you’re face-to-face, you have the opportunity to ask what changed and see if there’s a way to adjust the policy to meet their needs. Many cancellations can be reversed just by having a conversation.
- If affordability is an issue, offer to lower the premium. Some coverage is better than none, and clients are more likely to keep a policy when it fits their budget.
- If they are unsure about the benefits, take a few minutes to go over what the policy provides. Clients often forget details or misunderstand how their coverage works.
By making the extra effort to handle cancellations in person, you will save more policies and reduce chargebacks significantly.
Key Takeaways: How to Reduce Chargebacks and Protect Your Income
While chargebacks are part of the business, they don’t have to be a major problem. Agents who focus on selling the right way and following up properly can keep more of their business on the books and increase their long-term earnings.
- Use a consultative sales approach – Avoid high-pressure tactics and focus on educating clients and helping them make informed decisions.
- Sell the right products – Stick with level-benefit plans when possible and avoid guaranteed issue unless absolutely necessary.
- Maintain contact after the sale – Send thank-you notes, answer your phone, and check in on missed payments to keep policies active.
- Handle cancellations in person – Never cancel a policy over the phone. Meeting with clients gives you a chance to address their concerns and save the policy.
By applying these strategies, you will keep more policies in force, minimize chargebacks, and build a more stable and profitable insurance business.
